OFFICE OF THE ACCOUNTANT-GENERAL
CAPACITY BUILDING FOR LOCAL GOVERNMENT
Presenter: TV Pillay
|
Chief Director , National Treasury
1
| 17 August 2010
Capacity Building: Government and role players
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University – Curriculum design versus the LG workplace needs, is it still
relevant?
LGSETA – Can they structure MOU’s with Departments to assist in
mobilising the required resources for skills training?
PALAMA – Can they play a role in fast tracking skills training in the LG
arena?
DBSA – Can they assist with their development mandate?
National Treasury – FM - Regulate, Coordinate, Review, Guide, Support
and monitor?
DCoG – Their role in Governance and Oversight training?
SALGA – Support for Councillor development programmes?
Consultants - Are they delivering on their contracts?
22
LG CAPACITY BUILDING UNDERTAKEN BY
THE NATIONAL TREASURY
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National Treasury is responsible for training, supporting and monitoring
the reforms framework under LG finance;
Municipal Finance Management Internship Programme;
Budget and Treasury Office (BTO) survey;
Minimum Competency Regulations, Gazette 29967 of 15 June 2007;
Awareness raising on MFMA reforms;
Building capacity of the Provincial Treasury (PT) MFMA, and Provincial
Accountant-General units to assist municipalities;
Siyenza Manje programme - allocation of financial expertise;
CFO forums;
NT/PT MFMA coordinators quarterly meetings;
Financial Management Grant (FMG) allocations - published in DORA.
33
MUNICIPAL FINANCE MANAGEMENT INTERNSHIP
PROGRAMME (MFMIP)
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This graduate internship programme was introduced in 2004 to build in-house capacity of Budget
& Treasury Offices (BTO) within Municipalities;
A 2-year structured programme affording training opportunities to previously unemployed
graduates with Accounting, Economics, Finance of Auditing qualifications;
MFMIP focuses on all areas of support, e.g. mentoring, training and work rotation and is financed
from municipality budgeted funds and supplemented by the FMG;
There are 1181 interns in the 283 municipalities as at 31 July 2010; the target is 1500 by March
2011. (30 to 40 percent of the allocation is in support of the interns training and stipends);
We encourage municipalities to retain or, if unable, to refer interns to neighbouring municipalities
for permanent appointments after the training period;
This is a flagship effort worth replicating in other sectors, e.g. water and sanitation, public works,
etc.
44
MUNICIPAL FINANCE MANAGEMENT INTERNSHIP
PROGRAMME (MFMIP) AS AT 31 JULY 2010
Province
Number of municipalities
Captured on Intern Database
Eastern Cape
45
159
Free State
25
144
Gauteng
14
50
KwaZulu-Natal
61
271
Limpopo
30
161
Mpumalanga
21
79
North West
25
73
Northern Cape
32
121
Western Cape
30
123
283
1181
Total
55
BUDGET AND TREASURY OFFICE (BTO)
SURVEY
NT/PT undertook BTO survey in all municipalities;
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The purpose of the survey was to evaluate the establishment of the unit in
accordance with the MFMA;
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Understand financial management capacity constraints and requirements
per Municipality;
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Upon analysis, we recommended support areas and measures for
improvement;
The following key areas, amongst other, were surveyed:
o
Delegations within the key positions;
o
Qualifications of officials;
o
Experience of officials;
o
Number of officials within the BTO;
o
Financial performance information from the key responsibility areas;

A limited sample of 30 senior officials were surveyed in the 17 large
municipalities due to the large number of officials within a given BTO unit;
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Report used to provide feedback to municipalities on gaps,
recommendations and follow up in progress.
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66
Findings of the BTO survey
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Delegations of financial management responsibilities is still very weak in most
municipalities, thus creating unnecessary bottlenecks;
Key skills shortages in Financial Accounting, Auditing , Risk Management and SCM among
others, is common within most municipalities;
Financial performance information emerging from the responsibility areas still reflects a
weak internal control structures;
The metropolitan municipalities have the largest concentration of personnel with degrees or
diplomas;
The 17 large municipalities exhibit poor revenue management reflected in huge amounts
outstanding from consumers;
The use of consultants in the preparation of annual financial statements appears to be
widespread across municipalities;
There is a generally limited experience and financial management qualification base in
most municipalities.
77
Findings of the BTO survey
Continued
The next high level analysis of the data is presented using the following
municipal classifications:
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The 6 Metropolitan Municipalities are classified as Category A municipalities
comprising of a large urban complex with population size exceeding one
million and accounting for 56 percent of all municipal expenditure;
The 21 B1 local municipalities are classified as having large budgets and
consisting of major secondary cities;
The 29 B2 local municipalities have a large town as their centre;
The 111 B3 local municipalities have small towns, with relatively small
population and a significant proportion of urban population but with no large
town as a core;
The 70 B4 municipalities are mainly rural with communal tenure and with at
most, two small towns in their area;
There are 46 C district municipalities of which 25 of those are not water
service authorities and provide limited functions, whilst the other 21 are water
service authorities.
88
ACADEMIC QUALIFICATIONS WITHIN THE BTO’S
Municipal
Category
A - Metros
Proportion of
Disclaimers
or
Adverse
Audit
Opinions
(2008/2009)
Number of
municipalities
Total number of
staff
responses
Total number of
staff with no
Diplomas or
Degrees
Total number of
staff
with Diplomas and
Degrees
6
NIL
191
21
170
B1 – Secondary
Cities
21
33%
1790
1140
650
B2 – Local
Municipalities
29
34%
1249
821
428
B3 – Local
Municipalities
111
44%
2370
1653
717
B4 - Local
Municipalities
70
68%
1016
413
603
C – Districts
46
20%
950
439
511
7566
4487
3079
Total
283
99
MINIMUM COMPETENCY REGULATIONS,
GAZETTE 29967 OF 15 JUNE 2007
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The minimum competency levels were introduced to support a sustained, uniform and
consistent implementation of the MFMA reforms;
The regulations affect the following positions at a municipality:
o
Accounting officer;
o
CFO and CEOs for municipal entities;
o
Senior Managers;
o
Heads of SCM and other middle management officials;
The competency levels cover the required minimum:
o
Work-related experience;
o
Higher education requirements;
o
Performance management competencies as prescribed through the CoGTA
performance regulations;
o
Financial and SCM competency levels.
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The above is consistent with the work undertaken in the competency evaluation
of other divisions within municipalities by DCoG.
1010
MINIMUM COMPETENCY REGULATIONS
…
CONTINUED
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The Regulations were issued with the supporting implementation guidelines for the
affected positions;
Deriving out of the regulations was the need to develop an appropriate training
programme, Municipal Finance Management Programme (MFMP) in conjunction and
registered with LGSETA to facilitate ease of compliance progressively;
All training material and assessment instruments have been designed to ensure
consistent and uniform interpretation of the reforms;
Up to 40 regionally based training providers. PALAMA and DBSA’s Vulindlela
Academy received training status to deliver against the prescribed programme and
received free training material;
Further training on basic accounting skills are presented by SAICA’s (AAT) Accounting
Association Technician programme;

600 learners have completed the AAT programme to date. The following training
opportunities are currently running or planned for rollout:
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300 learners for WC; 250 for FS; 212 for EC; 100 for NC and 138 for NW; 200 for
MP; 366 of KZN; and 195 for LP
A high level summary of participation on the MFMP supporting the implementation of
the above Regulations follows.
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MUNICIPAL FINANCE MANAGEMENT
PROGRAMME
Learning Programmes
SAQA Unit Standard IDs
(NQF level 5) and NQF level 6
Strategic management;
Budgeting implementation and
Performance management
116358; 116342; (116345); 116364;
116363; 116341
Municipal accounting and Risk
management
Registered 09/10
Registered 10/11
Total Learners
2265
1221
3486
(119350); (119348); 116346; 116362;
116339; 116357; 116351
879
498
1377
Governance and Legislation
116348; 116343; 116344;116361;
(119334)
788
565
1353
Cost and capital planning
116347; 116340; (119331); (119341)
22
14
36
Municipal IT support and Project
management
(119351); (119352); (119343); 116360
303
255
558
SCM and PPP
116353; 119353
652
375
4909
2928
Total Learners
1027
1212
7837
INFORMAL TRAINING
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Informal training – basic FM reforms, awareness raising, and technical questions
answered, examples provided to delegates which emphasize MFMA reforms, such as:
o
Budgeting
o
SCM
o
GRAP standards
o
Reporting
o
Auditing
o
Oversight
o
Etc.
Reforms are developed with support from provincial treasury units, local government
departments and municipal officials;
The following slide presents a high level summary of 2 areas of informal training
support provided.
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INFORMAL TRAINING CONTINUED…
Province
Eastern Cape
Municipal Budget and
Reporting Regulations
2009/2010
Generally Recognised
Accounting Practice
(GRAP) statements
2009/2010
Total
180
128
308
97
137
234
Gauteng
206
77
283
Kwa-Zulu Natal
422
197
619
Limpopo
143
113
256
Mpumalanga
26
139
165
North West
99
72
171
Northern Cape
74
115
189
Western Cape
126
102
228
1 373
1080
2453
Free State
Total
1414
BUILDING CAPACITY OF THE PROVINCIAL
TREASURY (PT) MFMA UNITS
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The Budget Council and the Technical Committee on Finance have approved support
for all Provincial Treasury MFMA units to build capacity;
This action will assist in ensuring that municipalities receive continuous, efficient
support and monitoring in all areas of MFMA reforms;
Regular PT visits are undertaken by National Treasury, especially to provinces that
experience challenges in implementing the MFMA;
Future plans also include the placement of experts in the 9 provinces to assist all
municipalities in making Financial Management improvements.
1515
CFO AND PT MFMA COORDINATORS
FORUMS
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NT makes presentation on key issues covering FM in the CFO forums countrywide;
The quarterly MFMA provincial treasury coordinators meetings also serve as a
platform of review and update on the progress of MFMA implementation and reforms
relating to:
o
Compliance;
o
Support;
o
Monitoring;
o
Development of guides and circulars;
o
Feedback on training;
o
Coordinating joint efforts of provinces.
1616
FINANCIAL MANAGEMENT GRANT
(FMG) CONDITIONS
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Appointment of a minimum of five (5) interns;
Appointment of a qualified CFO;
Establishment of Supply Chain Management and Internal Audit units;
Ongoing review, revision and submission of MFMA Implementation plans to NT;
Improvement of the financial and reporting systems; implementation of the MFMA
reforms;
Acquisition of financial management system that can produce multi-year budgets, inyear reports, SDBIP, annual reports and automation of financial management
practices;
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Compliance with the MFMA Competency levels;
Preparation and submission of annual financial statements for audits and implement
changes required to address findings;
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Preparation of a financial recovery plan and implementation where applicable.
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FMG OUTCOMES STATEMENTS
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Improved capacity in financial management of municipalities;
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Progressive improvement in the quality of reporting for municipalities;
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Appropriately skilled financial management officers appointed in municipalities
consistent with competency regulations;
Municipalities have processes and producers in place to provide quality reports and
are publishing financial information on a regular basis;
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Continuous improvement in audit outcomes;
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Improved revenue, expenditure, asset and liability management;
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Improved overall compliance with implementing the MFMA.
1818
2
FMG OUTPUTS AS STATED IN DORA
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Improved and sustained skills development including the appointment of at
least five interns supporting the implementation of financial management
reforms in municipalities focusing on the gaps identified in MFMA
Implementation plans;
Upgrading of IT systems to deliver reports required for financial
management improvement and improve quality of data;
Preparation and implementation of multi-year budgets meeting uniform
norms and standards;
Assist in the implementation of supply chain reforms, producing quality and
timely financial statements;
Assist in the preparation and implementation of financial recovery plans;
Progressive improvements in audit outcomes;
Improvements to internal and external reporting on budgets, finance,
Service Delivery and Budget Implementation Plan (SDBIP), in-year and
annual reports;
Implementation of the MFMA.
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1
FMG ALLOCATIONS PUBLISHED IN DORA
PROVINCE
2009/2010
Actual Expenditure 30 June 2010 for
2009/10 allocations
Amount
Percentage
2010/2011
2011/2012
Eastern Cape
R 54 250 000
R 44 688 000
82.37%
R 62 800 000
R 66 300 000
Free State
R 26 500 000
R 23 839 000
89.96%
R 33 939 000
R 33 750 000
Gauteng
R 14 750 000
R 12 750 000
86.44%
R 19 250 000
R 19 000 000
Kwa Zulu Natal
R 67 490 000
R 56 349 000
83.49%
R 78 900 000
R 86 141 000
Limpopo
R 31 500 000
R 27 693 000
87.91%
R 37 750 000
R 38 750 000
Mpumalanga
R 22 750 000
R 18 947 000
83.28%
R 27 000 000
R 26 250 000
Northern Cape
R 30 000 000
R 26 833 000
80.97%
R 41 200 000
R 45 200 000
North West
R 22 750 000
R 18 240 000
89.44%
R 27 500 000
R 31 500 000
Western Cape
R 30 000 000
R 27 237 000
90.79%
R 36 250 000
R 37 750 000
R 299 990 000
R 256 756 000
86.00%
R 364 589 000
R 384 641 000
TOTAL
2020
FMG 2010/11 ALLOC. WITHHELD (1)
MUNICIPALITIES
2009/10
Actual Expenditure 30 June
2010
Amount
Ukhahlamba (EC)
Mkhondo (MP)
Nkangala (MP)
2010/11
Reasons for Withholding
%
R750 000
R382 000
50.93
R 1 000 000
Slow Expenditure: Awaiting
cash flow projection (CFO
contacted and promised
information)
R1 000 000
R368 000
36.80
R1 000 000
Slow Expenditure: Awaiting
cash flow projection (Prov.
Treasury visited munic.)
R750 000
R58 000
7.73
R1 000 000
Slow Expenditure: Awaiting
cash flow projection (CFO
working on the matter)
2121
FMG 2010/11 ALLOC. WITHHELD (2)
Actual Expenditure as at 30
June 2010
MUNICIPALITIES
2009/10
Amount
2010/11
%
Reasons for
Withholding
Bushbuckridge (MP)
R750 000
R71 000
9.47
R1 000 000
Slow Expenditure:
Awaiting cash flow
projection ((Prov.
Treasury visited
munic.)
Dikgatlong (NC)
R750 000
R388 000
51.73
R1 200 000
Outstanding Reports:
Still awaiting response
from Muni (CFO
suspended, acting
persons)
Molopo (NW)
R1 000 000
R662 000
66.20
R1 250 000
Slow Expenditure:
Awaiting cash flow
projection ((Prov.
Treasury visited
munic.)
uMdoni (KZN)
R1 500 000
R1 148 000
76.53
R1 200 000
Slow Expenditure:
Awaiting cash flow
projection (CFO
requested information)
2222
FMG 2010/11 ALLOCATIONS
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Transfer of FMG allocations to 242 municipalities undertaken in July
2010:

comply with DORA requirements;
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targeted spending levels were at 80% or higher;

Per payment schedule.
Transfers to 34 municipalities, who responded late to missing information
will be made before 30 August 2010;
Remaining 7 non-complying municipalities receive constant
correspondence, telephone calls, emails, requesting missing information
or cash-flow projects, and commitments;
Monitoring of progress, regular follow-ups, etc very time consuming.
2323
Conclusion

National Treasury will continues to support municipalities in building the required
capacity through:
o
o
o
o
o
o
o
o
The expansion of the Internship programme, bringing onboard new
graduates, assisting in the placement of current interns etc;
Liaising with LG stakeholders (SAICA, Universities, SETAs, DCoG etc) to
strengthen the capacity of all role players within the sector;
Support the efforts of other departments in the discharge of the
responsibilities under LG sector, as it relates to FM;
Strengthen, support and monitor the reform agenda required as per the
MFMA;
Monitoring the competency of official through the issued regulations;
Training of officials on preparation of AFS;
Provincial Accountant General forums;
Cluster approach in engagements with munic by introducing multi-disciplinary
teams.
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Conclusion
CONTINUED…
o
o
o
o
o
o
o
o
Develop and finalise the FMCMM specific for municipalities over the
medium term;
Development of a delegations framework for municipalities;
Revenue enhancement project;
Improvements in content, quality and frequency of reporting to
municipal councils and closer monitoring of resolutions taken by
municipalities;
Direct visits and writing to municipalities on key issues requiring
attention;
Recommendations to legislatures to implement and adopt joint
sittings to evaluate municipal progress;
Strengthening the municipal committee structure;
Separation of political from administrative appointments.
2525